The repercussions from David Cameron’s decision to walk away from last week’s EU summit continues to reverberate.

Today, the U.K. Prime Minister has defended his stance in a statement to lawmakers in the House of Commons.

Mr Cameron has being feted by euroskeptic members of his own Conservative Party for seemingly standing up to Europe.

However, Deputy Prime Minister Nick Clegg, the leader of the pro-European Liberal Democrats, the junior member in the coalition government, said Sunday Mr. Cameron’s move risked making Britain “isolated and marginalized.”

Mr Clegg’s comments sparked the biggest crisis of the coalition government since it was formed in May of last year.

Meanwhile, a report by the City of London regulator into the failure of Royal Bank of Scotland in 2008–which precipitated the banking crisis in the U.K.–has criticized members of the bank for its ill-fated takeover of European lender ABN Amro in 2007.

The Financial Services Authority said British taxpayers were subsequently forced to pay a £45.5 billion ($71.3 billion) bill when RBS faced collapse a year later.

Elsewhere in Europe, Italy auctioned some €7 billion ($9.36 billion) of 12-month BOTs. There is also growing concern that one of the rating agencies will downgrade euro-zone sovereign debt.

Italian and Spanish borrowing costs rose after European Union leaders last week failed to convince market participants that a long-term resolution to the debt crisis had been reached.

The yield on the benchmark 10-year Italian bond rose 0.16 percentage point to around 6.47%, according to Tradeweb. The Spanish 10-year bond yield was 0.14 percentage point higher at 5.85%.

Investors had pinned hopes on the EU summit delivering a large step forward to a solution for the crisis that has threatened to engulf larger economies in the region like Italy and Spain.

"This summit was not the circuit breaker that had been hoped for," said rates strategists at Rabobank, adding, "All in all, the backdrop is currently not looking overly conducive for Italy and Spain's issuance on Wednesday/Thursday."

Yields on the two countries had dropped in the run-up to the summit amid expectations of a definitive plan, and are now giving back those gains, with both countries set to issue bonds this week. Markets are also on the lookout for ratings action from Standard & Poor's Ratings Services, which had put 15 euro-zone countries on credit watch negative last week pending the outcome of the EU summit.

Further direction for market participants will come later in the morning from Italy, which is set to sell €7 billion worth of 12-month bills.